Using examples describe the five basis that are used to segment a market 20
Segmentation defines an act of subdividing market into smaller markets with homogeneous characteristics so as to meet the needs of that small market called a segment. The purpose of segmentation is the concentration of marketing energy and force on the market segment to gain a competitive advantage within the segment. . This helps the firm to subdivide the market into smaller market segments or groups each having a common variable and target these groups to enhance the firm’s performance. There are several basis used in segmenting a market and these include demographic, behavioral, geographical basis just but to mention a few.
Demographic segmentation involves various demographic variables such as Age, gender, family size, income, occupation, religion, race and nationality age, social class hence it is population based. This strategy aims at understanding the prospective markets and taking necessary steps to ensure that the needs of the targeted groups are met. For example a firm like Tanganda Tea Company may target a market where there are high class customers who are high income earners where levels of disposable income is also high and customers in these market segments are quality conscious that is they care more about the quality of a product than its price. As a result the company will produce very good quality tea that is the “A grade” tea which is highly priced and channel it to these market segments. However this may not work in market segments where there is a lot of customers who are low income earners and their levels of disposable incomes are low respectively. These customers are price sensitive that is they are affected by changes in prices of goods and services because an increase in the price of that product implies that they will turn to a substitute product which is less costly. In a bid to cater for these target markets Tanganda Tea Company will also produce low quality tea which is lowly priced and distribute it towards these markets hence improving the efficiency and competitiveness of Tanganda Tea Company on the market.
Moreso a firm may also target a market on the basis of age. For example a company involved in the production of clothes may target a market which is dominated by a large number of young people may decide to produce trending fashion clothes so as to meet the needs of the target market which has a better taste and preference than a market segment containing older age groups. For example, a cosmetic company can increase their customer base, by targeting audience of different age groups with products designed to meet their specific needs. For example, L’Oreal and Garnier are some of the leading cosmetic producers that cater to the needs of male and female customers of different age groups
Moreover a firm may consider a demographic factors such as religion, race and nationality. A firm targeting a market segment which has a large number of Indian Hindu may also produce cultural products such incense and also produce good quality traditional spices to cater for such customers in target market. For example in Zimbabwe firms are producing products which are HALAAL certified so as to cater for the Muslim community in Zimbabwe.
Not only that but also gender is also another factor used in segmenting a market. For examples if a discovers that the target market has a large number of females than males it means female products such as cosmetic products will be channeled towards that market to cater for the needs of that market e.g DOVE a company that soaps in a market with more females than males ended up producing a wide range of beauty soaps, lotions and cosmetics thus channel them to these markets so as to cater for the needs of the female customers in these target markets.